Brickability warns of earnings hit as demand remains under pressure

27 February 2024, 09:14

Houses under construction
Brickability profit warning. Picture: PA

The group’s shares plunged by as much as 15% on Tuesday after it said demand will take longer to recover than first expected.

Building materials firm Brickability Group has seen shares tumble after it warned earnings will be at the lower end of forecasts as sales continue to slump amid woes in the housing market.

The group’s shares plunged by as much as 15% in Tuesday morning trading after it said sales will remain under pressure for longer than first feared, affecting earnings.

It said sales by volume for bricks have been “significantly” lower in the past year across the wider market, with UK despatches down around 30% last year and imports into the UK falling by 42%.

The company said its own sales reflect market trends, with pricing also becoming increasingly competitive due to lower demand.

It warned that demand for bricks and building materials is set to remain lower until the end of its financial year in March, with the market recovery set to take longer than expected.

This is set to leave full-year underlying earnings “towards the lower end” of market forecasts for £46.2 million.

Brickability said: “Whilst it is encouraging that the rate of inflation is trending down favourably and the widely expected fall in interest rates will benefit the wider market, trading conditions are expected to remain challenging for longer than initially anticipated.

“As a result, the board now considers it appropriate to assume a more conservative profile for the group’s recovery over the next 12 months.

“The underlying long-term demand for UK housing remains robust, and the group is well placed to benefit significantly as the market and volumes recover.”

The warning comes as Britain’s construction sector – and the housing market in particular – has been hit hard by cost inflation and interest rates being raised to the highest levels since 2008.

This has knocked homebuyer demand and also the property renovations market as home loans and financing have become far more expensive.

By Press Association